Common use of Parachute Payment Gross-Up Clause in Contracts

Parachute Payment Gross-Up. If any payment, benefit, or distribution of any type to or for the benefit of Employee, whether paid or payable, provided or to be provided, or distributed or distributable pursuant to the terms of this Agreement or otherwise (collectively, the “Parachute Payments”) would subject Employee to the excise tax imposed under Section 4999 of the Code (the “Excise Tax”), the Company will make an additional payment to Employee in an amount (the “Gross-Up Payment”) such that, after payment all taxes and any interest or penalties imposed with respect to such taxes (including, without limitation, federal, state, local income, employment, excise and other similar taxes, but excluding any taxes imposed under Section 409A of the Code) (the “Parachute Tax”) on both the Parachute Payments and the Gross-Up Payment, Employee will be in the same position as if no Parachute Tax had been imposed; provided, that in no event may the Gross-Up Payment exceed $2,000,000. Any Gross-Up Payment shall be timely paid by the Company on Employee’s behalf directly to the appropriate taxing authorities when due, but in all events no later than the last day of the calendar year after the calendar year in which the Parachute Tax shall be paid. The determinations with respect to this Section 13(b) shall be made by an independent accounting firm selected by the Company and reasonably acceptable to Employee (the “Accounting Firm”) paid by the Company. (i) It is possible that, after the determinations and selections made pursuant to Section 13(b), Employee will receive Parachute Payments and Gross-Up Payments that are, in the aggregate, either more or less than the limitations provided in Section 13(b) above (hereafter referred to as an “Excess Payment” or “Underpayment”, respectively). If it is established, pursuant to a final determination of a court or an Internal Revenue Service proceeding that has been finally and conclusively resolved, that an Excess Payment has been made, then Employee shall refund the Excess Payment to the Company promptly on demand, together with an additional payment in an amount equal to the product obtained by multiplying the Excess Payment times the applicable annual federal rate (as determined in and under Section 1274(d) of the Code) times a fraction whose numerator is the number of days elapsed from the date of Employee’s receipt of such Excess Payment through the date of such refund and whose denominator is 365. In the event that it is determined (y) by a court of competent jurisdiction, or (z) by the Accounting Firm upon request by Employee or the Company, that an Underpayment has occurred, the Company shall pay an amount equal to the Underpayment to Employee within ten (10) days of such determination together with an additional payment in an amount equal to the product obtained by multiplying the Underpayment times the applicable annual federal rate (as determined in and under Section 1274(d) of the Code) times a fraction whose numerator is the number of days elapsed from the date of the Underpayment through the date of such payment and whose denominator is 365; provided, that in no event shall the sum of (i) the Gross-Up Payment, and (ii) the additional payment pursuant to this sentence, exceed $2,000,000. (ii) Any Gross-Up Payment, as determined pursuant to this Section 13(b), shall be paid by the Company and remitted to the relevant tax authorities when such payment is due, provided that in no event shall such payment be made later than the end of your taxable year next following Employee’s taxable year in which the Parachute Tax on a Parachute Payment are remitted to the Internal Revenue Service or any other applicable taxing authority or, in the case of amounts relating to a claim described in Section 13(b)(i) that does not result in the remittance of any federal, state, local and foreign income, excise, social security and other taxes, the calendar year in which the claim is finally settled or otherwise resolved.